Structuring investment portfolios is one of our most important responsibilities. We believe successful investment strategies originate in the planning process, from taking the time upfront to thoroughly understand the financial profile, time horizon, risk tolerance, needs, and goals of each of our clients. We then design an asset allocation strategy consistent with these factors, and select investments based on a rigorous fundamental research and review process.
Five Core Principles
We strive to ensure our investment strategies are:
- SimpleLow complexity and cost-efficient
- RationalFundamentally-based and logically-consistent
- DisciplinedWell-defined parameters with limited tactical deviation and controlled risk
- DurableLong-term perspective, viable through market cycles
- ExplainableEasy to communicate and to understand
Asset Allocation: Diversification, Discipline, and a Long-Term Perspective
We focus on constructing well-diversified, liquid, lower-cost portfolios of exchange-traded funds (ETFs) and professionally-managed mutual funds, and we rebalance portfolios periodically to prudent, strategic asset class allocations that are durable over time. By rebalancing to strategic allocations in a disciplined way, it allows us to buy low and sell high systematically. Trying to time the market with frequent tactical trading is not productive, and instead we advocate a patient, long-term approach.
On occasion, we will tilt portfolio allocations modestly in favor of asset classes we believe are under-valued on a long-term basis, but only if we believe prospective risk-reward is unusually attractive over a 3-5 year horizon. Tactical deviations are controlled by strict upper and lower allocation bands around our long-term strategic asset class allocations to control risk.
Investment Selection: Narrowing the Funnel
We spend considerable time researching our mutual fund and ETF partners, and cultivating primary and secondary fund choices in each asset class category. We use a mix of actively-managed mutual funds and passively-managed ETFs to lower costs and to ensure diversification. With respect to actively-managed funds, our investment selection process has multiple stages:
Investability, fees, diversification, volatility, track record
Manager incentives, parent quality/stewardship
In-depth fund diligence
Manager quality, depth of research, strength of process
Investment Committee review
Thorough vetting relative to potential alternatives
The result is that only a select few funds make the cut, and these are generally managers we believe are excellent stewards of capital and solid long-term partners.
* Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice.